Portfolio Observations

In the second quarter, the Keeley Gabelli Small Cap Dividend Fund rose 11.5%, trailing the 17.2% gain in its benchmark, the Russell 2000 Value Index. As always, we disaggregate relative performance into three factors: dividend vs. non-dividend, sector allocation, and stock selection. It

Tata Group stocks saw wild swings this week as multiple developments linked to the much-awaited Tata Sons IPO kept investors on the edge. The stocks sharply surged up to 20% on Tuesday after RBI rejected Tata Sons’ application for voluntary surrender of its Certificate of Registration (CoR) to be classified as an unregistered Core Investment Company (CIC), paving the way for a public listing of the holding company of India’s largest business conglomerate.

The Tata Group stocks saw another sharp surge on Thursday after Tata Sons approved a fresh five-year extension for Chairman N Chandrasekaran’s tenure and set the ball rolling for the much-awaited IPO of the group holding company. The shares of the Tata Group companies dropped on Friday after Tata Trusts labelled Chandrasekaran’s appointment illegal.

Here is how seven listed Tata Group companies performed during the holiday-shortened week and how much exposure they have to Tata Sons.

Tata Chemicals

Tata Chemicals saw the sharpest upswings and downswings last week. The shares of the company sharply rallied 20% to hit the upper circuit on Tuesday. After marginally falling on Wednesday, the stock jumped another 6.5% on Thursday, before falling 11% on Friday. Overall, the stock gained 13% during last week. Tata Chemicals holds 2.5% stake worth Rs 30,052 crore in Tata Sons.
Also read | Tata Sons IPO: Why Tata Chemicals may be the biggest beneficiary although Tata Motors, Tata Steel own bigger stake

Tata Motors PV

Tata Motors Passenger Vehicles shares sharply gained more than 4% on Thursday, but dropped more than 3% on Friday. The stock overall gained only 1% during the week. Tata Motors PV holds a 3.06% stake in Tata Sons, valued at approximately Rs 36,348 crore.

Tata Steel

Tata Steel witnessed notable price movements during the week, rising alongside other group stocks on Tuesday and Thursday before trimming gains on Friday. Overall, the stock posted modest gains of around 1.4% over the holiday-shortened trading week. Tata Steel holds a 3.06% stake in Tata Sons, valued at approximately Rs 36,348 crore.

Tata Power

Tata Power registered sharp price swings throughout the week, tracking the group-wide momentum sparked by Tata Sons’ listing updates. Despite Friday’s broader retracement, the stock closed the week on a positive note. The shares of the company closed nearly 2% higher at Rs 375 apiece on Friday. The stock overall gained around 3% in a week. Tata Power owns a 1.65% stake in Tata Sons, worth Rs 19,599 crore.

IHCL

The Indian Hotels Company (IHCL) managed to retain most of its mid-week gains despite Friday’s pull-back. The shares of the company overall gained around 2% in a week. IHCL holds a 1.11% stake in Tata Sons, valued at Rs 13,185 crore.

Also read | What Shapoorji Pallonji said on Tata Sons’ listing and why he wants it to be a ‘bridge’

Tata Consumer Products

Tata Consumer Products participated in the mid-week rally following regulatory developments, before cooling off during Friday’s trading session. The stock finished the week relatively flat with 0.5% gains. Tata Consumer Products holds a 0.43% stake in Tata Sons, worth Rs 5,107.7 crore.

Tata Investment Corp

Tata Investment Corporation saw significant buying interest, rallying strongly on the news of Tata Sons’ listing progress before falling on Friday. Overall, the shares of the company gained 8% during the week. Tata Investment Corp holds a 0.08% stake in Tata Sons, valued at Rs 950.3 crore.

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Europe’s STOXX 600 tumbled on Friday in broad-based losses led by automobile and telecom shares, while also logging a weekly decline in a week marked by retreating oil prices and interest-rate decisions by major central banks.

The pan-European index fell 1.1% to 635.45 points, giving up almost all the gains made in the last two sessions. It was down 0.6% for the week.

Regional bourses also ended the session in the red, with London’s FTSE 100 and Germany’s DAX down 1.5% and 1.6%, respectively.

The automobile and parts sector fell 3.4%, with Volkswagen leading the losses in its biggest one-day drop since September 2025, down 5.6%.

The company slashed its outlook, flagging €10 billion ($11.5 billion) in one-off items related to its stake in luxury sports car maker Porsche, provisions for job cuts and a weak Chinese market.

Porsche shares fell 4.9%.
Telecommunication stocks were down 3.3%, posting their biggest single-day fall since April 2025, with Airtel Africa dropping 11.3% to become the STOXX’s top decliner after Bloomberg News reported that its unit Airtel Money is considering downsizing its London IPO.Food and beverages lost 1.9%, with Nestle down 2.6% after Russia seized control of the Swiss food giant’s local assets.

Oil prices pared earlier losses on Friday as markets assessed Saudi supply alongside concerns about a widening Middle East conflict. Still, energy shares shed 0.7% and fell 0.5% for the week.

A respite in the selloff in the bond market, along with receding crude prices, helped risk sentiment this week. The moves came even as the US Federal Reserve increased rates, while the Bank of England left rates unchanged but warned that further tightening may be needed if the war in Iran drags on.

The central banks’ headlines added to the sense that the policymakers were now getting the jump on inflation.

“The focus for next week will be whether this month’s rate hikes represent insurance against an energy-driven inflation shock or the beginning of a lengthy global tightening cycle,” said Daniela Hathorn, a senior market analyst at Capital.com.

“If yields stabilise and oil continues lower, equities could find some breathing room.”

Meanwhile, the European healthcare sector was the best performer this week, followed by insurance, while banks and automobiles were the worst hit.

Also on the radar are developments ahead of next week’s meeting between US President Donald Trump and his Chinese counterpart Xi Jinping.

Among other stocks, Orange dipped 5.8% after Morgan Stanley downgraded the French telecoms company to “underweight.”

LPP climbed 8% after Poland’s largest fashion retailer reported a 64% rise in second-quarter net profit.

US Treasury yields were higher on Friday, with two-year yields hitting their highest since July 2024, as investors evaluated the outlook for interest rates following the Federal Reserve‘s first rate hike in three years this week.

Investors are eyeing the prospect of a new global rate-tightening cycle as worries about inflation have mounted.

On Friday, the Bank of Japan raised interest rates to a 31-year high and its governor signaled the central bank has entered a new phase focused on preventing inflation from overshooting its target.

The Fed on Wednesday raised rates and flagged more hikes in the coming months, while Fed Chairman Kevin Warsh delivered hawkish comments.
“The two-year is going to be moving in tandem with hike pricing,” said Molly Brooks, US rates strategist at TD Securities.

“There’s more risk (of) pricing in more hikes than pricing out hikes at this point.”
Traders see a more than 55% chance of another increase when the US central bank next meets in October, according to CME FedWatch. That expectation was at 53% late Thursday.The yield curve between 2- and 10-year notes was last at 25.5 basis points, after earlier reaching 23.8 bps, the flattest since June 25.

The two-year yield has been driven higher faster than the 10-year yield, in part because of expectations of more hikes, while longer-dated debt has been relatively kept in check by the Fed’s apparent willingness to control inflation.

“The Fed meeting was able to kind of calm market nerves a little bit in terms of the long end,” Brooks said.

Investors will weigh upcoming data for clues about the US economic outlook.

Yields mostly held gains after data on Friday, including a report showing US factory production unexpectedly fell in August after seven straight monthly increases.

Spikes in oil prices tied to the US-Israeli war on Iran have been behind some of the inflation concern.

But oil prices eased on Friday after China, acting on a request from Saudi Arabia, quietly asked Iran to limit attacks by Houthi rebels on Saudi oil infrastructure.

The yield on the benchmark U.S. 10-year Treasury note was last up 5.3 basis points at 5%. It reached 5.041% on Tuesday, the highest since 2007.

The two-year US Treasury yield, which typically moves in step with interest rate expectations for the Fed, was last up 5.3 basis points at 4.743%. It earlier reached 4.7475%, the highest since July 2024.

The yield on the 30-year bond was up 3.6 basis points at 5.332%.

Story Continues

The dollar jumped against the yen on Friday after two policymakers at the Bank of Japan dissented from a widely expected decision to raise interest rates, raising doubt among traders about the likelihood of further hikes.

The dollar pared gains after Japanese authorities conducted rate checks in the currency market – considered a preliminary step before intervention – the Nikkei newspaper reported.

The BOJ pushed rates to their highest level in 31 years at 1.25%, yet the move did not boost the Japanese currency as traders felt there was a lack of explicitly hawkish guidance.

The decision, coming on the heels of the Fed’s hawkish message from earlier this week, clears the way for further dollar strength, strategists said.

“(The) lack of hiking punch makes it easier for USD to go higher,” Steven Englander, head of G10 FX research at Standard Chartered, said.

“The USD strength that we have been forecasting for the medium to long term may finally be here,” Englander said.
The US dollar was 0.5% higher at 156.725 yen, after rising as much as 1.3% to a two-week high of 158.05 yen.It was set for its largest weekly rally since October 2025.

“They’ve just clearly underwhelmed versus expectations here,” said Ray Attrill, head of FX strategy at National Australia Bank in Sydney.

“And I think that one of the more staggering aspects of it was that they couldn’t even get the unanimous vote for that,” he said. “That really raised eyebrows in the market.”

Traders remained alert to the risk of intervention to prop up the currency after Finance Minister Satsuki Katayama said Tokyo won’t hesitate to conduct further coordinated action, following a joint US-Japan move to boost the yen in late July.

“A hike that weakens the currency is an uncomfortable outcome for policymakers and gives the Ministry of Finance a stronger case to push back against one-sided price action,” Kevin Ford, FX and macro strategist at Convera, said.

The yen rallied sharply in early September to its highest since February as traders bet the BOJ would embark on multiple rate hikes, although those wagers came into question on Friday.

Energy Prices In Focus

FX market participants remained focused on energy prices and the US Federal Reserve.

The dollar index, which tracks the currency against six major peers, was up 1.2% for the week to around a seven-week high after the US Federal Reserve hiked interest rates on Wednesday and signalled more increases could be coming.

Traders see a roughly 55% chance of a quarter-point hike at the Fed’s next two-day meeting next month, up from 27% a week ago, according to the CME Group’s FedWatch tool.

Oil prices slipped to their lowest levels in around a week on signs of easing supply pressures in Saudi Arabia.

China has asked Tehran to help rein in the Iran-aligned Houthis after their military blitz on Saudi Arabia over the past week, three Iranian sources familiar with the matter told Reuters.

The euro rose 0.5% to $1.1481 and was set to end the week 1% lower after the Fed’s rate hike.

The British pound was 0.3% higher at $1.3391, after retail sales data beat expectations on Friday. The Bank of England held interest rates on Thursday but also suggested it could raise borrowing costs.

In cryptocurrencies, bitcoin rose 5.9% to $81,000 on Friday – its third straight day of gains – as it extended a rebound from Tuesday’s sharp selloff, when the US Senate failed to advance comprehensive cryptocurrency legislation in a setback for digital-asset companies.

Wall Street took a break Thursday from worrying about interest rates and inflation to revert to a tried-and-true investment idea: snapping up shares of companies tied to artificial intelligence.

A rally in tech stocks from chip makers to the Magnificent Seven giants to data storage companies led U.S. stock indexes higher Thursday, bringing relief to investors after a rough stretch in which stocks tumbled and the 10-year Treasury yield reached its highest level since 2007.

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